Dispatches From Gaza

From a distance, the shimmering façade of Gaza's first five-star hotel rises above the coast like the lone survivor of a tsunami.

The 2008-09 Israeli invasion left thousands of buildings damaged or destroyed, and economic sanctions, which include restrictions on concrete, have made rebuilding an agonizingly slow undertaking. Yet the 10-story Al-Mashtal boasts more than 270 modern rooms, a lagoon-style swimming pool, and an ornate, marble-filled interior.

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On closer inspection, Gaza's first five-star hotel is something of an economic mirage. Although a paper sign posted at the front entrance warns visitors that there's a food and drink minimum for those wishing to sit at the restaurant bar, the lobby is all but deserted.

"We're not exactly open," Shadi Agha, the hotel's head of reception, told me, as he led me through elaborately tiled halls. "It's a trial period."

The pool at the Al-Mashtal

Over the four years that Gaza has been under blockade, any sign of development has become part of a dueling propaganda war. Critics of Israel point to Gaza's economic collapse as proof of a humanitarian disaster, while its supporters are quick to counter with apparent evidence of consumer abundance. And like much of Gaza's new economic development, the hotel is a temptingly easy metaphor; it just depends which way you look: Standing on the balcony of a top-floor suite, from one side, you can see the hotel's empty swimming pool, and on the other, unsightly piles of garbage.

Inside, at least, the hotel lives up to its five-star claim: It features a top-floor "royal suite," which comes with its own reception area and multiple security rooms (enclosed rooms near the entrance to the suite where guards can monitor and screen anyone entering), and in the basement, workers were finishing an ornate Turkish bath and sauna. Outside on the patio, smartly uniformed waiters serve colorful milkshakes in sugar-rimmed glasses, and a group of women in fashionably tight jeans and spiked heels smoke shisha (evidence that Hamas' attempt to ban women from smoking in public didn't last more than a few months).

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The building that houses the Al-Mashtal hotel has, like Gaza, a turbulent history. Construction of the building, which was intended for offices, began in 1996, but it was halted when the second intifada broke out in 2000. Investors eventually decided to turn it into a hotel, and construction started anew, only to halt a second time when Hamas took power in 2006 and Israel imposed an economic blockade.

Over the last few years, however, plans for the hotel moved forward again, helped in part by the elaborate smuggling tunnels connecting Gaza to Egypt, which allowed building materials to flow into the strip. Agha insists, however, that these days the hotel's supplies have come in through "official coordination," meaning legal trade rather than the tunnels.

Both Israelis and Palestinians are painfully aware of the public-relations aspect of such seemingly grandiose commercial projects: When the Gaza Mall opened in 2010, it was described by many outlets as a "luxury mall," proof that Palestinians were not suffering under the blockade. When I visited the mall this May, it appeared neither luxurious nor bustling: The modestly sized two-story structure was filled with a handful of decidedly unluxurious shops selling Israeli-made clothing and basic household goods, and it was mostly devoid of customers.

In some respects, Hamas-controlled Gaza is buzzing with construction, and the seaside area of Gaza City is lined with new restaurants. Over the last year, Israel has eased the blockade, allowing some building materials to get through, and the rest come through the tunnels, albeit at a premium. Gaza—or at least Gaza City—shows signs of basic economic improvement. Consumer products are flowing in, and the Gazan equivalent of a dollar store (a 2.5-shekel shop, which is actually equivalent to about 73 cents), sells everything from women's underwear to cooking whisks. For better or for worse, the Al-Mashtal is just one sign of Gaza's slow recovery. In Gaza City, once-pockmarked streets are being rebuilt with attractive brick pavement. Ziad al-Za Za, a former economic minister for Hamas, rattled off a laundry list of projects in progress, ranging from street construction to rebuilding residential housing.

A local art student paints murals for road safety day

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When I was there, Gaza was in the middle of a "Green Gaza" campaign that involved, among other improvements, planting trees along city streets (al-Za Za said the goal is 1 million new trees). There was also a traffic-safety campaign, and local art students were enlisted to work painting colorful murals depicting traffic accidents and exhorting citizens to drive safely.

Hamas officials I met with in Gaza were bullish on the economic prospects, at least for its own coffers. Fresh from signing a reconciliation agreement with Fatah, which controls the West Bank, Mahmoud al-Zahar, a top Hamas official, went on a whirlwind fundraising tour of the Muslim world. "After the celebration of the agreement, I met many people from the Arabic embassies and the Islamic side," he told me. "They are ready to share in the budget, in salaries, and in reconstruction."

Arab countries had already given some $30 million to help reconstruct the streets of Gaza, and more funds are expected. "Money," al-Zahar said with a smile, "is the least of our problems."

Graduation at Hamas' rebuilt police academy. Many government, and particularly security, buildings were destroyed during the 2008-09 war.

But much of the investment that Hamas has put into Gaza is, at best, superficial, and despite improvements to streets and buildings, employment prospects are still dismal, and the blockade, even if loosened, remains in place. Indeed, the Al-Mashtal illustrates a fundamental dilemma of Gaza's economy: Gaza is now open enough that it can get the materials necessary to build projects like a five-star hotel, but it lacks the economy to support it.

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In what may already be one unfortunate sign, the hotel has switched brand names. It was originally supposed to be a Marriott, but in 2004, it became part of the Switzerland-based MövenpickHotels & Resorts chain. More recently, however, it dropped the Mövenpick name and is now an "ArcMed" hotel.

Agha explained that the hotel had recently come under the management of ArcMed, which he described as a "Spanish-based" line of hotels. (I wasn't able to identify any other hotels owned by the chain, whose Internet domain name was registered in March of this year. "We have hotels in Spain and in the Middle East," reads the ArcMed Hotels website, which says the company "defends the principles of defense of the different cultures, solidarity among peoples, no discrimination and peaceful coexistence.")

Now that the hotel is finished, the question is: Who will come? Tourism, with the exception of visits by some political supporters, is almost unknown in Gaza. And catering to Palestinians is an unlikely prospect; even at deeply discounted prices, the hotel's management knows most Gazans can't afford their prices. Agha said the plan is to concentrate on foreigners.

As we walked through the empty hotel, Agha pointed out the amenities, from the mundane, such as smoke detectors, to the ornate, like $30,000 carved wood doors imported from Egypt. Some of the hotel's finer touches, like a bar stocked with expensive-looking martini glasses, were a curious investment given Hamas' ban on alcohol. "It has everything," Agha said.